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A month has gone by since the last earnings report for Delta Air Lines (DAL - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Delta due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

On an adjusted basis, total revenue per available seat mile (TRASM) in the first quarter increased 2.4% year over year to 16.7 cents. TRASM improvement was more than the guidance of 2% increase projected earlier in April 2019.

Other Details

During the quarter under review, passenger revenues, which accounted for 88.4% of the top line, improved 6%. Meanwhile, cargo revenues declined 5%. However, other revenues increased 2%. The average fuel price (adjusted) in the first quarter was $2.05 per gallon, reflecting a 1.8% increase on a year-over-year basis.

Total operating expenses, including special items, climbed 4% year over year to $9,452 million. Operating cost per available seat mile decreased 1.4% to 15.14 cents. Also, non-fuel unit costs declined 0.2% to 11.06 cents.

Liquidity, Dividend and Share Repurchase

Delta exited the quarter with $1,910 million in cash and cash equivalents. The company generated free cash flow of $760 million and adjusted operating cash flow of $2 billion in the first quarter.

Long-term debt and finance leases stood at $7.7 billion at the end of the reported quarter compared with $8.3 billion at the end of 2018. The company has managed to reduce its net debt significantly from the 2009 levels.

Delta returned $$1.6 to its shareholders through dividends ($233 million) and share buybacks ($1.3 billion) in the quarter under review. The company expedited share buybacks in the quarter, funded by a $1 billion short-term loan.

Guidance

For the second quarter, Delta expects earnings (excluding special items) between $2.05 and $2.35 per share. Additionally, the carrier anticipates pre-tax margin in the range of 14-16%. The estimated fuel price, including taxes, settled hedges and refinery impact, is expected in the band of $2.10-$2.20 per gallon. Total unit revenue, on an adjusted basis, is anticipated to increase 1.5-3.5% in the quarter.

Total adjusted revenues are expected to grow between 6% and 8% in the April-June period. System capacity is anticipated to be up approximately 4-4.5% on a year-over-year basis. Cost per available seat mile, excluding fuel and profit sharing, is projected to rise 1-2% in the second quarter.

For 2019, Delta expects revenues to grow 5-7%, up from its prior projection. The uptick can be attributed to strong demand for air travel.

For 2019, free cash flow is anticipated between $3 billion and $4 billion. Cost per available seat mile, excluding fuel and profit sharing, is expected to grow 1% in the same period.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Delta has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Delta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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